Leave And License Agreement Commercial Template and Key Clauses (2026)

What is a commercial leave and license agreement? A leave and license agreement is an Indian document that lets one party (the licensee) use another's premises for a stated purpose and period, without transferring any interest in the property. For commercial premises, such as an office, shop, warehouse or clinic, it is the common way a business occupies space that it does not own. The owner (the licensor) grants a personal permission to occupy, keeps legal possession, and takes a monthly license fee plus a refundable deposit. Businesses use a leave and license rather than a lease because it is simpler to end, generally does not create a tenancy interest in the premises, and in several states is the standard, registry-friendly route for occupancy of up to a limited term. For commercial use the stakes are higher than for a home, so the agreement must be precise about permitted use, fees, deposit, repairs, lock-in and exit. This article is general guidance, not legal advice. Property law, registration and stamp duty vary by state and jurisdiction, so have a qualified professional review any agreement before you rely on it. Last verified October 2026. ## Leave and license vs lease The distinction matters because it changes your rights: - A lease (governed by section 105 of the Transfer of Property Act, 1882) transfers an interest in the property and a right to possession for the term. A tenant can be harder to remove and may gain statutory protections.

• A leave and license (resting on the idea of a license under section 52 of the Indian Easements Act, 1882) grants only a personal permission to use the premises. Legal possession stays with the owner, and the permission ends when the agreement ends. Courts look at the substance, not just the label: if a document gives exclusive possession and the features of a tenancy, it may be treated as a lease despite being called a license. Draft a license to behave like one. ## Commercial leave and license agreement template Copy the block below and fill the bracketed fields. ``` LEAVE AND LICENSE AGREEMENT (COMMERCIAL) This Agreement is made on [DATE] at [place] BETWEEN: [LICENSOR NAME], [address] ("Licensor") AND [LICENSEE NAME / COMPANY], [address] ("Licensee") 1. LICENSED PREMISES The Licensor grants the Licensee leave and license to use [describe premises, area in sq ft, floor, address] ("Premises") for the Licensee's business of [permitted use] only. 2. TERM The license is for [N] months, from [START] to [END], with no tenancy or interest in the Premises created in the Licensee's favour. [Renewal terms, if any.] 3. LICENSE FEE The Licensee will pay a license fee of [AMOUNT] per month, payable in advance by the [N]th of each month, with an escalation of [X]% [annually / on renewal]. 4. SECURITY DEPOSIT The Licensee will pay a refundable, interest-free deposit of [AMOUNT], refundable within [N] days of handover, less lawful deductions for dues or damage beyond normal wear. 5. LOCK-IN AND TERMINATION There is a lock-in of [N] months. After lock-in, either party may end the license on [N] months written notice. The Licensor may terminate for non-payment or breach not cured in [N] days. 6. USE, UTILITIES AND TAXES The Licensee will use the Premises only for the permitted use, pay [electricity/water/maintenance] charges, and comply with building rules. [Property tax / society charges] are borne by [party]. 7. REPAIRS AND ALTERATIONS The Licensor maintains the structure; the Licensee keeps the interior in good condition and makes no structural alteration without written consent. 8. NO SUBLICENSING The Licensee will not sublicense, assign or part with possession of the Premises. 9. HANDOVER On expiry or termination, the Licensee will hand over vacant Premises in the original condition, normal wear excepted. 10. REGISTRATION AND STAMP DUTY This Agreement will be stamped and registered as required by the law of [state], with costs borne by [party]. 11. GOVERNING LAW AND DISPUTES Governed by the laws of [state/India]; disputes resolved by [courts / arbitration seat at [place]]. Signed Licensor: __________ Signed Licensee: __________ Witness 1: __________ Witness 2: __________

- **License fee and escalation (clause 3).** The licensor wants a firm escalation; the licensee wants a predictable cap. State the percentage and whether it applies annually or only on renewal, so there is no yearly argument.
- **Deposit (clause 4).** Commercial deposits are often several months of fee. The licensee wants a clear refund timeline and limited deductions; the licensor wants cover for dues and damage. Fix the refund window and what may be deducted.
- **Lock-in and termination (clause 5).** Lock-in protects the licensor's income and the licensee's certainty, but it cuts both ways: during lock-in neither side can walk away cheaply. Match the lock-in to the fit-out the licensee is funding.
- **Repairs and alterations (clause 7).** For commercial fit-outs this is a frequent dispute. Split structural (licensor) from interior (licensee), and require consent for alterations plus a reinstatement rule at exit. ## Common mistakes to avoid - Giving exclusive possession and full control, so the "license" is really a lease and loses its advantages.
- Skipping registration or correct stamping where the state requires it, which can make the document hard to rely on in court.
- No clear lock-in, so either side exits early and the other is left exposed.
- Vague deposit-refund terms, the single most common source of exit disputes.
- No reinstatement clause, so the parties fight over the fit-out at handover. ## A note on jurisdiction Leave and license is primarily an Indian concept, and the rules vary by state. Registration and stamp duty are state subjects: for example, Maharashtra requires leave and license agreements to be registered, and stamp duty is calculated under state law, while other states differ in both rate and procedure. Whether registration is compulsory, the stamp duty payable, and the notice and eviction route all depend on the state where the premises sit. Outside India the equivalent is usually a commercial lease or licence to occupy under local property law, with different formalities. The safe approach is to confirm the registration and stamp duty position for the specific state or country before signing. <!-- [VERIFY] current state-wise registration and stamp duty rates --> ## Where a contract workspace helps A template gets you one solid commercial license. The ongoing work is everything after: keeping fee, escalation, lock-in and deposit terms consistent across a portfolio of premises, remembering each renewal and notice deadline, checking a landlord's draft for terms that quietly make it behave like a lease, and finding the right version when a dispute arises. Drafting a commercial leave and license, reviewing it for clauses that lean toward a tenancy, tracking the lock-in and renewal dates and governing a portfolio of premises can live in one AI workspace tuned to how your business takes space. [Adira](https://adiralaw.com) is a workspace of this kind. This template alone is enough to put a fair commercial license in place; a single workspace just makes the drafting, review and tracking one connected job.